In 1998, attorneys general from across the nation reached a historic settlement with the tobacco industry to pay for the health care costs associated with smoking. The payouts live on in perpetuity, and will generate $206 billion through 2025 alone.
Wall Street came calling with an opportunity for cash-strapped states to get their money up front instead of waiting: tobacco bonds. States could have their cash now if they agreed to pay back the bonds with the tobacco settlement money that was due to them over time.
The only problem is, with compounding interest, these states must pay pack about $64 billion against only $3 billion that was advanced.
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